13 Sep Thinking of Filing Bankruptcy? Don’t Always Listen To Friends.
“My friend told me that I will lose my house if I file bankruptcy so I know I don’t want todo that … but I have so much debt I just don’t know what to do.”
The myth that you can’t file bankruptcy and keep your house just won’t go away. While some people maylose their house, it isoften more common thatit happensbecause they can’t make their mortgage payments, and not because they filed for bankruptcy.
- Many people file bankruptcy and keep their home, cars and personal belongings.
How you are affected will depend on your particular circumstances, how much your house is worth, what your loan balance(s) is,andeven the state you live in.
Taking legal advise from friends is almost never a good idea, unless they are a lawyer and know what they are doing. If the friend doesn’t know the details of your loan, the value of your house, and what else is going on in your financial life, they can’t know if your home is at risk.
Each state allows you to keep a certain amount of property if you file bankruptcy, and most states have a homestead to protect some or all of your home.
The allowances are called exemptions, and the bankruptcy laws have a set of Federal Exmeptions, but allow states to opt out and use their own state’s exemption laws. On top of that, you might have to use exemptions from a state you used to live in if you try to file bankruptcy in a state that you haven’t lived in at least two years.
The homestead exemption varies greatly, with some states only protecting a small amount of equity in the home, and others protecting it totally.
The best thing to do is to talk to an experienced attorney in your area so they can tell you what exemptions to use, if you can be helped, and if you have anything to worry about. Don’t just take your friend’s word for it.
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